1. |
Short sales are for homeowners who, after selling their home, still do not have enough money to pay off the bank mortgage. |
2. |
When first looking for homes, realize that the homeowner usually is not the person who picks the offer to submit to the bank. They are not getting anything for the home anyway, so they leave this responsibility to their agent. The agent may choose an offer on a 1st offer in basis, or best price, or potential of longevity to stay in the short sale process. |
3. |
Listing agents, after preparing the short sale packet, will also submit your counter-offer to the bank. |
Time Period: 1 week - 2 month to compile everything |
4. |
After the offer is submitted and the bank receives the offer, the lender will send out for a BPO and an appraisal to calculate the value of your home. |
Time Period: Between 1-2 months after the bank receives the short sale packet |
5. |
After the lender receives the BPO/ appraisal price, they will compare the offered price and the appraised price to see if they are willing to accept the offer, or give a bank-approved price. |
Time Period: Between 1.5-2.5 months after receiving the short sale packet |
6. |
The lender will then contact the listing agent, and the listing agent will return the information to the buying agent. If the original buyer has walked away, they can give all backup offers or interested buyers this chance to accept the bank conditions. If more than one buyer is willing to accept the offer, then the agent will usually pick the offer with the most secure financial situations, usually the all cash offers will prevail. Other factors may be those who can close escrow fastest, depending on their mortgage time. Those with FHA loans, for example, may not be chosen over others at this time because it takes a longer escrow to complete |
Grace’s Take:
After doing multiple short sales, I have developed a systematic approach to dealing with short sales. If buyers come to personally find me for my own short sale listings, then I tend to give them a higher priority than other offers because it is easier to communicate with all parties, without a 3rd person party who may not return my phone calls. Since the short sale process is so long, this is very important.
When we submit offers, we usually will submit the 1st offer to the lender to give them an opportunity to go into escrow, unless the buyer chooses otherwise.
In my own listings, of course there will be many variations and issues that come up. Some clients may choose to pursue other choices due to new government laws. In all regular cases without any client complications, I have had a 90% success rate.
Grace’s Approach on Buying Other Agents’ Short Sales:
When clients look to me to help them purchase short sale properties from other agents, I usually like to see how far the short sale has progressed, to see what the best plan of action for you will be.
- If it is a 1st offer submission and no offers have been submitted yet, then I encourage my clients to submit an offer as soon as possible so that they can have a better chance to go into escrow, if nothing else goes wrong.
- If the case has already been submitted with the bank, then I encourage my client to wait, since 40% of these properties usually don’t get an approval. I will continuously keep you updated with the status, so if the original buyer walks out and the property has been approved, then we can immediately snatch up the opportunity.
Every agent has their own way of handling short sales, and I thought I would disclose my procedures so that you can make an informed decision before dealing with the long wait of a short sale.
Chapter 4: REO & Short Sale Advisory - Will NOT REPAIR |
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